Qualcomm beats fourth-quarter estimates, but first-quarter profit outlook is lower

Qualcomm (QCOM) reported its fourth-quarter results after the bell on Wednesday, beating top and bottom line expectations and delivering a better-than-expected first-quarter revenue outlook.

But a lower-than-expected midpoint for its earnings per share (EPS) forecast sent the stock lower following the report.

For the fourth quarter, Qualcomm reported adjusted earnings per share (EPS) of $2.17 on revenue of $10.32 billion. Analysts expected EPS of $2.16 and revenue of $10.12 billion.

The company reported EPS of $3 and revenue of $11.27 billion in the same quarter last year.

Qualcomm also offered first-quarter revenue guidance of between $10.4 billion and $11.2 billion, a midpoint above Wall Street’s forecast of $10.6 billion.

EPS, however, is expected to range between $2.15 and $2.35, with a midpoint of $2.25. Analysts were looking for $2.32

Qualcomm’s QCT segment, which includes phone and auto sales, declined 8% year over year but beat Wall Street expectations for the fourth quarter with revenue of $9 billion. Analysts were calling for $8.8 billion.

Most of the decline came from Qualcomm’s handset business, whose revenue fell 26% year-over-year to $5.1 billion. Analysts expected $5.3 billion.

But the company’s automotive segment helped offset some of that impact, with sales up 89% to $2 billion.

Qualcomm’s QTL business reported $1.3 billion in revenue for the quarter.

The chip giant is in the midst of a broad effort to bolster its data center, automotive, edge computing and PC businesses, as it strives to reduce its reliance on smartphone chip sales.

On Wednesday, Qualcomm announced a deal to provide technology to SpaceX’s (SPCX) Starlink as the satellite network giant ramps up efforts to establish a terrestrial network that would rival AT&T (T), T-Mobile (TMUS) and Verizon (VZ).

In late October, Qualcomm announced that it was working with Anduril on a product line called BlueChip, focused on reshoring computer manufacturing. The companies say they will start by focusing on a laptop that will use Qualcomm’s Snapdragon X chips.

And in September, the company signed a deal with Amazon for custom chips designed for its AWS AI infrastructure.

But Qualcomm, like the rest of the consumer electronics industry, is also facing the impact of the memory and storage shortage, which has forced companies to raise prices on everything from smartphones to laptops, driving down demand.

On Monday, when announcing its fourth-quarter results, Apple noted that the memory crisis would continue to reduce margins in the future. Intel (INTC) and AMD (AMD) also said they expect PC sales to decline in the next quarter, sending Intel shares plunge nearly 29%.

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on @DanielHowleyor contact Signal or Telegram.